Political and reputational risks in 2020

The shape of politics in 2020 will in part be determined by the shape of Brexit – we don’t yet know if the UK will leave the EU on 31 January or delay again. Even if we do leave, the discussions will quickly move on to the shape of the future arrangements with the EU. So, either way, any hopes that Brexit might be ‘settled’ by the time of our Annual Conference are a non-starter.

There is also now a General Election taking place on 12 December. Although the Conservative Party currently has a strong lead in the polls, a number of variables – including strong poll ratings for the Liberal Democrats and the Brexit Party – make it hard to predict an outcome.

We continue to see signs from both main parties that they do want to move beyond Brexit when they can and focus on their domestic policy agendas. We’ve also seen clear signs that regulators have an appetite to advance their agendas on some of the medium and long-term issues facing the UK economy. In our response to these issues we must ensure the sector as a whole demonstrates our value at the heart of the economy in Helping Britain Thrive.

The PRA are soon likely to take key decisions on how insurers should respond to the challenge of climate change – this will impact both investment and capital decisions, and also the approach insurers take to assessing their exposure to climate change risk.

In 2020, we can expect to see the final outcomes of the FCA’s work on GI pricing, following up their interim report in early October. At the same time, it is possible regulators will start looking more broadly at how insurers use data in their pricing, and to explore the scope to which ‘open banking’ could be extended to other parts of the financial services sector.

Talking of which, we hope to see the Pensions Bill return quickly no matter which party wins power, which should mean legislation for pensions dashboards that we have long called for. This is of course just one way of addressing issues raised by an ageing society – a topic that cuts across most, if not all, of the insurance and long-term savings market. Another key part of this will be social care, where the General Election campaign will hopefully promise (and deliver) more decisive action than before now. That said, don’t be surprised if it doesn’t. Of course, the potential role of insurance in this will be an area of fierce scrutiny – and one that will be radically different if Labour emerge as the largest party after a General Election.

All of these areas will see policymakers and regulators take decisions that will shape the long-term prospects of our sector. The Annual Conference will represent an opportunity to show where the industry can take a lead on these challenges, and will also allow us to hear first-hand from policymakers about how they propose to take this forward.